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Authorities allege a second attack was planned after the first plot failed. It involved an attempt to build an improvised chemical dispersion device to release colourless toxic gas.

"It was designed to release the highly toxic hydrogen sulfide," Mr Phelan said, but he stressed the alleged conspirators "were a mile-and-a-half from having a functioning chemical dispersion device".

There was no evidence the device was designed to be used on a plane.

Khayat, of Lakemba, and Mahmoud Khayat, 32, of Punchbowl, had their matter mentioned at Parramatta Local Court on Friday, after each was charged with two counts of acting in preparation for, or planning, a terrorist act on Thursday night.

Their lawyer, Michael Coroneos, said his clients were "entitled to the presumption of innocence".

"Once the brief of evidence is served we can assess their legal position," Mr Coroneos told reporters outside court.

The men, who were refused bail ahead of another court mention on November 14, face a maximum penalty of life imprisonment.

A third man remains behind bars held under special anti-terror laws. He can be detained until the weekend.

Mr Phelan said the aborted July 15 plot involved a high-end explosive concealed in a meat grinder.

"This is one of the most sophisticated plots that has ever been attempted on Australian soil," the deputy commissioner said.

"If it hadn't been for the great work of our intelligence agencies and law enforcement over a very quick period of time then we could very well have had a catastrophic event in this country."

Authorities believe the bomb wouldn't have made it onto the plane. They've since created a mock IED to test the airport's security.

"We had a 100 per cent success rate in terms of our mock IED being picked up," Mr Phelan said.

It's alleged parts for the IED came from Turkey, with a senior Islamic State member sending components to Australia by air cargo.